Accounting for Deposits

The accounting treatment of a deposit depends on how the funds are received and used:

1. Deposit as Storage of Own Funds

If the deposit is used to store company funds for later withdrawal:

Record a transfer from the current account to the deposit account using Money Transfer
The funds remain an asset but change form

Entry:

Dr Deposit Account
Cr Current Bank Account

The return of funds to the current bank account can also be performed via Money Transfer.

See more on Money Transfers

2. Deposit to Supplier without a loan agreement

If money is transferred to a supplier as a deposit, it is not an expense, but an asset (prepayment/deposit):

Step 1. Create a Bank Payment (or Cash Payment)

Create a Bank Payment (or Cash Payment) with the Transaction Type: To Supplier.

On the Payment Details tab:

Select the supplier
Check the Advance box
Choose GL Account: Deposits Paid to Suppliers

Entry:

Dr Deposits Paid to Suppliers
Cr Cash / Bank

See more on Cash/Bank Deposit (to Supplier)

Step 2. Receive the Accrued Deposit Interest

Create a Bank Receipt with the Transaction Type: Others.

On the Payment Details tab, enter the following:

GL Account
Department
Income Item
Business Activity
Amount
Company
Contract

Press Post or Post and Close

3. Deposit Issued as a Loan

If the deposit represents a loan issued to another party (with interest):

Step 1. Create a Loan Agreement

Path: Money > Loan Documents > Loan Agreements

Select Transaction Type: Loan Issued
Fill in:
- Borrower
- Contract / Agreement number
- Loan amount
- Interest rate
- GL accounts and other dimensions

On the Amortization Schedule tab:

Set schedule type and payment frequency
Enter loan start date, term, and repayment start date
Click Calculate, then review and post

See more on Loan Agreements

Step 2. Record the Loan Disbursement

Create a Bank Payment with Transaction Type: Loan Issued

On Payment Details tab, select:

Contract
Loan Agreement
GL Account (Loan Receivable)

Entry:

Dr Loan Issued
Cr Cash / Bank

Step 3. Income (Interest) Accrual on a Loan Issued

During Month-End Closing, if the "Calculate Monthly Interest on Loans" option is selected in the Month-End Closing assistant, the system automatically generates a Processing of Current Loans document.

This document lists each loan (including loans issued) with the monthly interest and fee amounts to be posted as income (for loans issued) or expenses (for loans received) for the current period.